Today is Monday, March 2, 2020, and this is your daily energy stocks roundup. Today we're looking at the valuations of Valvoline (NYSE: VVV), ProPetro Holding Corporation (NYSE: PUMP), and Solaris Oilfield Infrastructure (NYSE: SOI).
Valvoline (NYSE: VVV) is a $3.641 billion company today with a one-year return of 3.78%. Let's look at its price-to-earnings (P/E) ratio, its enterprise-value-to-free-cash-flow (EV/CF) ratio, and its debt-to-equity ratio to gauge whether or not it's a good investment.
The company's P/E ratio of 16.1 is 51.17% higher than the industry average of 10.65. That's not good. A company's P/E ratio shows its price as a multiple of its earnings per share (EPS). A relatively high P/E ratio is generally an indicator that a company is overvalued.
Valvoline's enterprise-value-to-free-cash-flow (EV/FCF) ratio of 25.55 is 91.24% higher than its industry average of 13.36. Not a good sign. A company's EV/FCF ratio measures its enterprise value (market cap adjusted for cash holdings and debt) against its free cash flow (how much money the company has after all of its cash outflows). A high EV/FCF ratio could indicate that a company is performing inefficiently, has too much debt, or is starved for cash.
The debt-to-equity (D/E) ratio of Valvoline has increased by 77.80% over the last year. That's not good.
A company's D/E ratio equals its total liabilities divided by its shareholder equity. It's a measure of a company's financial leverage. A declining D/E ratio indicates that a company is decreasing its debt burden over time, while a rising ratio indicates that a company is taking on more debt over time.
Valvoline has scored favorably on 0 of our 3 valuation metrics. With this in mind, we believe the stock is very overvalued.
ProPetro Holding Corporation (NYSE: PUMP) is a $859.27 million company today with a one-year return of -55.89%. Judging by its price-to-earnings (P/E) ratio, its enterprise-value-to-free-cash-flow (EV/CF) ratio, and its debt-to-equity ratio, is it a good investment?
The company's P/E ratio of 4.028 is 81.45% lower than the industry average of 21.71. That's good.
ProPetro Holding Corporation's enterprise-value-to-free-cash-flow (EV/FCF) ratio of -67.17 is below zero. That's not good.
The debt-to-equity (D/E) ratio of ProPetro Holding Corporation has decreased by 36.01% over the last year. That's good.
ProPetro Holding Corporation has scored favorably on 2 of our 3 valuation metrics. With this in mind, we believe the stock is a good value.
Solaris Oilfield Infrastructure (NYSE: SOI) is a $2.811 billion company today with a one-year return of -69.58%. Is it a good value based on its price-to-earnings (P/E) ratio, its enterprise-value-to-free-cash-flow (EV/CF) ratio, and its debt-to-equity ratio?
The company's P/E ratio of 6.166 is 71.60% lower than the industry average of 21.71. That's good.
Solaris Oilfield Infrastructure's enterprise-value-to-free-cash-flow (EV/FCF) ratio of 7.01 is 42.40% lower than its industry average of 12.17. That's good.
The debt-to-equity (D/E) ratio of Solaris Oilfield Infrastructure has decreased by 100.00% over the last year. That's good.
Solaris Oilfield Infrastructure has scored favorably on 3 of our 3 valuation metrics. With this in mind, we believe the stock is a great value.
To summarize, we believe Valvoline (NYSE: VVV) is very overvalued, ProPetro Holding Corporation (NYSE: PUMP) is a good value, and Solaris Oilfield Infrastructure (NYSE: SOI) is a great value.
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